High Frequency Trading Programs (HFTP) collect a Â¼ of a penny rebate for every transaction they make. Theyâre not interested in making a gains from a trade, just collecting the rebate.

Letâs say an institutional investor has put in an order to buy 15,000 shares of XYZ company between $10.00 and $10.07. The institutionâs buy program is designed to make this order without pushing up the stock price, so it buys the shares in chunks of 100 or so (often it also advertises to the index how many shares are left in the order).

First it buys 100 shares at $10.00. That order clears, so the program buys another 200 shares at $10.01. That clears, so the program buys another 500 shares at $10.03. At this point an HFTP will have recognized that an institutional investor is putting in a large staggered order.

The HFTP then begins front-running the institutional investor. So the HFTP puts in an order for 100 shares at $10.04. The broker who was selling shares to the institutional investor would obviously rather sell at a higher price (even if itâs just a penny). So the broker sells his shares to the HFTP at $10.04. The HFTP then turns around and sells its shares to the institutional investor for $10.04 (which was the institutionâs next price anyway).

In this way, the trading program makes Â½ a penny (one Â¼ for buying from the broker and another Â¼ for selling to the institution) AND makes the institutional trader pay a penny more on the shares.

And this kind of nonsense now comprises 70% OF ALL MARKET TRANSACTIONS. Put another way, the market is now no longer moving based on REAL orders, itâs moving based on a bunch of HFTPs gaming each other and REAL orders to earn fractions of a penny.

Currently, roughly five billion shares trade per day. Take away HFTPâs transactions (70%) and youâve got daily volume of 1.5 billion. Thatâs roughly the same amount of transactions that occur during Christmas (see the HUGE drop in late December), a time when almost every institution and investor is on vacation.

HFTPs were introduced under the auspices of providing liquidity. But the liquidity they provide isnât REAL. Itâs largely microsecond trades between computer programs, not REAL buy/sell orders from someone who has any interest in owning stocks.

In fact, HFTPs are not REQUIRED to trade. Theyâre entirely âfor profitâ enterprises. And the profits are obscene: $21 billion spread out amongst the 100 or so firms who engage in this (Goldman Sachs (GS) is the undisputed king controlling an estimated 21% of all High Frequency Trading).

So IF the market collapses (as it well could when the summer ends and institutional participation returns to the market in full force). HFTPs can simply stop trading, evaporating 70% of the marketâs trading volume overnight. Indeed, one could very easily consider HFTPs to be the ULTIMATE market prop as you will soon see.

In case you haven't noticed this year has been the year with probably the smallest net intraday changes in price when compared to overnight gaps. In other words, almost every day you have huge gaps only to end the day with little change from the open.

What that tells me is the US is no longer the master of it's own universe. It's markets are now being driven by foreign trading in foreign exchanges. Not the way most Americans think, huh?

Screw US markets. Let these leeches suck each other dry!

Most movement in US market is 'fake'. If you trade a lot of stocks/sectors, you can see it.

High Frequency Trading Programs account for 70% of market volume. TAKE AWAY 70% of MARKET VOLUME AND YOU HAVE FINANCIAL ARMAGEDDON.

High Frequency Trading Programs (HFTP) collect a Â¼ of a penny rebate for every transaction they make. Theyâre not interested in making a gains from a trade, just collecting the rebate.

TAKE AWAY 70% of MARKET VOLUME AND YOU HAVE FINANCIAL ARMAGEDDON. Isn't that what we have now with only GS winning

But they are interested in the move of the gain as it creates the volitility and ability to do more trades.

Everyone I know who is trading daily in the futures is having problems exiting a few contracts. I am not looking to see the futures trade like MSFT or CSCO but these big moves to only channel afterward a few points for hours is not good either. I have never seen the futures gap so many times during the day since March of this year. The biggest moves happen at open, oil close and a few minutes prior to close. Lately the biggest move is actually from 4-415pm like es today.

Take away HFT, the real trading begins. Sure mkt will lose volume......but it was all fake anyway. HFT has really been abusing the mkt lately and it definitely needs to be banned. Unlikely, but some rules definitely can change the picture here......instead of flashing bids/offers, it needs to stand for at least a full second before it can be cancelled.

Only reason it wasn't until now is that it manipulated the mkt to the upside and our greedy government made a lot of money from it. It looks like politicians(including Chuck) are finally surfacing this. and HFT firms are getting nervous. Hopefully i won't be paying so much slippage starting soon........